Client built a seperate structure (roof only) on which he has installed solar panels. He has a duplex for which one is rented out to non related party. Can he depreciate half of the structure materials and solar panel less the 30% credit and deduct as a rental expense using a 5 year life?
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If you are claiming 50% is for the rental, then only 50% qualifies for the Residential Credit.
The other 50% MIGHT qualify for the business credit on Form 3468, but that gets much more complicated.
- If constructed started in 2024, he probably qualifies for the ?48 credit, which is slightly less complex. And Basis is only reduced by HALF of the credit.
- If constructions didn't start until 2025, then you would need to look at the ?48E credit or the ?45Y credit. Both have additional rules and aren't exactly designed for a rental home.
- Depending on the details, it is hypothetically possible 100% could fall under the business credit as a completely separate business. But in my OPINION, if there is a Net Metering contract, that usually voids the ability to say it is a separate business.
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